Dopo una succinta introduzione alla Banca europea per la ricostruzione e lo sviluppo (BERS), in particolare al suo incerto status giuridico di banca internazionale di sviluppo e alle sue operazioni e attività di prestito, il lavoro si concentra sui principi e le regole di accountability e good governance così come recentemente riformati dal Consiglio d’Amministrazione della BERS. La tesi sostenuta è che, nonostante gli innegabili progressi compiuti dall’insieme delle politiche di accountability e good governance adottate nel 2018, la BERS non può ancora presentarsi come un’organizzazione internazionale pienamente responsabile nei confronti dei suoi stakeholders. E questo, considerato che i principi e le regole sulla trasparenza bancaria e l’accesso del pubblico ai documenti interni relativi ai progetti di sviluppo finanziati risultano corredati da troppo numerose e troppo ampie deroghe ed eccezioni.
This work focuses on the principles of public accountability applied by the European Bank for Reconstruction and Development (EBRD). After an exposition of the EBRD, its status as a public development organization and of its lending operations and activities, the general rules and principles governing the EBRD’s accountability towards external stakeholders are considered and critically analysed, focussing in particular on the newly adopted set of good governance policies. The accountability and good governance principles reviewed are the social and environmental principles and standards which the EBRD has identified for itself and committed to comply with throughout its lending activities and operations. The work considers whether and to which extent these general principles, rules and standards constitute a satisfactory legal framework against which the EBRD’s lending activities and operations may be appraised. Then the work proceeds to assess the transparency and public participation principles as also codified by the EBRD in its internal policies, as well as the mechanisms offered to external stakeholders to seek redress from the EBRD in case they are harmed by one of its sponsored operations and activities. The redress mechanism examined is the recently established Independent Project Accountability Mechanism (IPAM). The work concludes that, despite the major advancements and progress made by the set of good governance policies adopted in 2018, the EBRD cannot portray itself as a fully accountable international organization so long as the general principles of transparency and public access to the project’s internal documents are accompanied by too many and broad waivers and exceptions, and also as long as its redress mechanism (the IPAM) lacks any real enforcement power on EBRD organs and staff.
KEYWORDS
European Bank for Reconstruction and Development – Civil Society – Transparency – Lending Operations – Accountability.
Articoli Correlati: Banca Europea di Ricostruzione e Sviluppo - trasparenza - società civile - attività di prestito - accountability
I. Preliminary Remarks. - II. Insights on the Impact and Accountability of the Multilateral Development Banks. - III. The European Bank for Reconstruction and Development: A Unique Multilateral Lending Organization Outside the EU’s Institutional Framework - IV. Principles of Accountability of the EBRD - V. The Right to a Remedy and Reparation Under the Prism of the New Project Accountability Policy. - VI. Final Remarks. - NOTE
This paper focuses on the principles of social and environmental accountability as applied and implemented by the European Bank for Reconstruction and Development (EBRD). As surprising it may appear, this is a topic that has received little attention so far in legal writings [1], at least in comparison with the attention given to the corresponding principles of public accountability developed in the discourses on civil society and poverty reduction of other multilateral development banks (MDBs) [2]. Although this lack of interest can be explained by a number reasons such as that the EBRD has been almost universally criticised for avoiding accountability towards civil society and for generally not taking all the relevant environmental and social issues into consideration when evaluating its investment and development projects [3], it certainly cannot be justified. And, in fact, since its establishment to the present moment the EBRD has played a strategic role as the most influential financial investor in Central and Eastern Europe, including of investment projects of high environmental impact and of high social cost [4]. Also significant because the EBRD was the first MDB to explicitly pursue an environmental mandate according to its establishing agreement [5]. But that is not all: the EBRD has repeatedly and even quite recently, undertaken substantive reforms with the purpose of ameliorating its public accountability and good governance practices [6]. After an overview of the EBRD, of its controversial status as a public development institution, the work will consider, critically evaluate and assess its substantive and procedural accountability practices and general principles, as recently confirmed in its new lot of policies on good governance and public accountability. The evaluation will specifically take into consideration the circumstance in which the EBRD, uniquely among multilateral lending institutions, has a political mandate in that it assists only those countries committed to and applying the principles of multi-party democracy and pluralism, and the opportunities that this may offer to achieve a set of best practices with regard to its social and environmental accountability [7].
As institutions engage in a growing and heterogeneous array of global challenges ranging from post-conflict reconstruction activities [8] to pandemics [9] and climate change [10], MDBs have been the subject of a lively debate both in academic circles and among the public that has principally aimed to define their potential impact on and public accountability to civil society [11]. Through their large-scale and investment projects and aid to developing countries and other stakeholders, such as private sector operators, MDBs contribute to global economic growth and development in a manner that otherwise would be difficult if not impossible. They are a great asset available to recipient-country governments in supporting their national development strategies and in aligning them to the universal and cross-sector Sustainable Development Goals (SDGs) and to the Agenda 2030 on Sustainable Development [12]. Conversely, the development projects supported by the MDBs can also produce severe negative externalities demanding vigilant and cautious attention. Such projects – especially large-scale infrastructure and investment projects – not rarely have a negative impact on the natural environment and/or on the lives of vulnerable social groups, including and in particular of minorities and indigenous peoples [13]. This impact, as well as the power of the MDBs to effectively control and mitigate the potential negative consequences arising from their sponsored investments through recourse in particular to policy advice and loan conditionalities, have prompted several human rights groups and certain segments of civil society and local populations to ask for increased external accountability for MDBs’ financing operations and activities [14]. ‘Accountability’ is the term of most importance in the present work. For our purposes, it can be defined as the right of some actors to hold other actors to a set of rules and standards, to judge whether they have fulfilled their responsibilities in light of these rules and standards, and to impose sanctions if they determine that these responsibilities have not been met [15]. Accountability (or public accountability) is a universally acknowledged key operational rule of good governance that is applicable to any entity operating in the public interest to guarantee the latter’s endurance of the current democratic values and principles [16]. In [continua ..]
A) Institutional Status of the EBRD. – Established in 1991 in Paris under the proposal of at that time French president Francois Mitterrand to help build a new post-Cold War era in Central and Eastern Europe, and with the declared intention of its founders to either close or to merge with the European Investment Bank (EIB) after the achievement of its tasks, the EBRD pursues a unique mandate [21]. This mandate is unique not only because it reflects the extraordinary moment in Europe’s history in which the Bank was created, namely the collapse of communism in its East, but also because it differs from typical characteristics of other multilateral development organizations like the World Bank and the Inter-American Development Bank. Because of these and other reasons such as the EBRD’s political purpose of fostering pluralism and multi-party democracy in its sponsored countries and its emphasis on the private sector [22], the Agreement Establishing the European Bank for Reconstruction and Development (the EBRD’s Establishing Agreement) renounced to classify it formally as a proper development organization [23]. But this lack of classification should not, per se, be considered sufficient to conclude that the EBRD is not a multilateral development organization. On the contrary, a number of arguments can be put forward to maintain that the EBRD is in reality exactly that, though with an original mandate at the time of its foundation. Of particular weight is the argument that, like any multilateral development/financial institution, the EBRD is endowed – for the purpose of conducting its banking activities – with an international legal personality that is autonomous from that of its founding states and members [24]. Another argument worthy of mention is that the EBRD’s originality largely consists in the fact that it combines the functions of the World Bank (WB) and of the International Finance Corporation (IFI) into one single international organization [25]. A third argument is that the EBRD is organized as a corporate structure that serves the interests of all its shareholders – 70 countries from five continents plus the European Union and the European Investment Bank (EIB) – not just those countries which receive its investments [26]. A fourth argument to be considered is that the EBRD’s Articles of Agreement expressly require the EBRD to take [continua ..]
A study of the general principles of public accountability and transparency of the EBRD is both of practical and theoretical significance, at least for the following two reasons. First and foremost, because the EBRD mobilises significant flows of foreign direct investments beyond its own financing. In 2018, for instance, the EBRD disbursed 9.5 billion of euro in 37 countries, where it conducted 395 investment operations and activities in 71 trade finance agreements under the Trade Facilitation Programme [63]. EBRD’s financial support thus makes a wide spectrum of developmental activities and investments a consolidated reality. Nevertheless, the EBRD’s financial support alone does not wholly explain its strong influence on investment conditions. Considering that the EBRD normally works in cooperation with other multilateral financial organizations and banks, its effective financial support shall also be assessed in terms of its capacity in making other institutional or private actors contribute to the sponsored investment projects [64]. This appears evident if one looks at the EBRD’s limited capacity to invest in the public sector that obliges the Bank to search for other sponsors of the project given the impossibility for it to use more than forty per cent of the amount of its total committed loans, guarantees and equity investments, according to Article 11, para. 3, lett. i) of the EBRD’s Establishing Agreement. The EBRD’s impact is also influenced by its expanded geographic scope to the countries of the Southern and Eastern Mediterranean region and to Mongolia [65]. Such impact is also influenced by the nature of the sponsored activities and projects, for instance exploitation of land and other natural resources, which are usually the source of externalities, some positive but mainly negative ones. This powerful position alone calls for an in-depth revision of the EBRD’s approach to accountability and to good governance instruments [66]. A further element indicates the necessity to pay detailed attention to the EBRD’s public accountability. The EBRD is a policy-driven organization [67], and is mandated to pursue sustainable development [68]. It is essentially a ‘political institution’ in the sense already discussed above. And this affects investment activities and projects in two different respects. First, the EBRD cannot sponsor development activities and investment [continua ..]
The general premise behind the adoption of the Project Accountability Policy as well as of the previous grievance internal procedures (the Internal Recourse Mechanism (IRM) and the Project Complaint Mechanism (PCM)) is that complete accountability of the EBRD cannot be possible without access to remedies and reparation for affected or potentially affected stakeholders. And in fact, without access to remedies and reparation, accountability of the EBRD would be incomplete as it would lack its retrospective dimension, that is its capacity to have an ex post reaction against a failure or an alleged failure by the Bank of its internal policies and procedures. This circumstance, perhaps more than anything else, explains why the EBRD by following the good example of other MDBs, and in particular of the World Bank, has for some time put internal mechanisms in place for permitting external stakeholders to voice concerns and achieve redress for harm caused by its activities and financial operations. Until 2019, the EBRD relied, first, on the IRM and, second, on the PCM, but is now equipped with a new, fully independent and impartial grievance mechanism called Project Accountability Mechanism (IPAM), that has entered into force in January 2020 in substitution of the PMC [165]. Two complementary, non-judicial and non-adversarial functions for handling requests are characteristics of IPAM [166], and these are respectively the problem solving function and the compliance function. Like the compliance function the problem solving function must be exercised in conformity with the guiding principles of transparency, predictability, accessibility and equitability as well as in conformity with the other guiding principles enshrined in the Project Accountability Policy [167]. The rationale behind the problem solving function has been identified in that of enhancing dialogue between complainants and clients to resolve the environmental, social and public disclosure issues underlying a request, rather than in that of attributing blame or fault to the EBRD’s competent organs. The second and most traditional function, namely the compliance function, check whether the Bank (but not also the client) [168] has properly complied with the applicable law, principles and standards through its actions and inactions, and provides recommendations to the EBRD management in that regard. But that is not all. It also allows the IPAM to act as a [continua ..]
This work has critically reviewed and analysed the EBRD’s approach to issues of public accountability and good governance. It has shown that the EBRD, notwithstanding being the first and still one of the very few international financial institutions to promote and take into account environmental concerns and the concept of sustainable development in an environmental context, closely resembles the practices of other MDBs, and in particular of the World Bank. And this is though the latter does not institutionally pursue the same development and environmental mandates [180]. Concerning its standards and general rules and principles of substantive accountability, it is clearly evident that these principles, rules and standards apply to EBRD-sponsored activities and projects to be realized within the EU’s territory. And this is for the double reason that the EPEs encompass EU principles on environment and that there is an explicit reference to EPEs in the text of the EBRD’s Environmental and Social Policy of 2019. On the contrary, it remains uncertain and disputable if the EPEs can also be used to set benchmarks for social and environmental practices for activities and projects supported by the EBRD beyond the EU borders. And in fact, though the language of the Environmental and Social Policy might lead to conclude that the EPEs are able to work as normative benchmarks for sponsoring investment activities and projects to be carried outside the EU’s territory, this fact per se should not be considered sufficiently decisive, as explained in subpara. 4.1.1. In relation to the general principle of transparency as codified in the newly revised EBRD’s Public Information Policy (PIP), it is worth observing that this good governance principle still presents some serious shortcomings: the first relates to the involvement of external ‘stakeholders in the design of the EBRD-sponsored projects and activities and in the adoption of concrete lending decisions; and the other, perhaps even more significant, is that the EBRD has identified a narrow range of situations where documents not to be disclosed under the PIP may in fact be disclosed [181]. Finally, and in conclusion, one may regret, as was also regretted elsewhere, that the jurisdiction of the EBRD Administrative Tribunal has not been expanded to review EBRD violations, (e.g., to hear environmental and social cases that the Project Complaint Mechanism (PCM) was [continua ..]